HEADLINES [click on headline to view story]:

Family Money

Snap Shot

Modern Medicine

Heart to Heart with Hillary

A Slice of Thai History

Bits ‘n’ Bobs

Personal Directions

Social Commentary by Khai Khem

Family Money: The bear in perspective

By Leslie Wright,
Managing director of Westminster Portfolio Services (Thailand) Ltd.

This time last year, financial industry commentators were predicting that equity markets would recover by the end of summer 2002. Like so many predictions during this bear market, it didn’t happen. Indeed, a similar sentiment prevailed during the rally in early 2001, which fizzled out in the second quarter.

From the start of 2002 to the end of Q3, the S&P 500 dropped by 31.8% while the FTSE All-Share dropped by 28.9%. Europe fared even worse, with the DAX 30 dropping by 41.1% and CAC 40 by 38.2%.

Since then, the sheer volume of short-term money sloshing around the global markets looking for a safe home - over $7 trillion by some estimates - has resulted in a roller coaster ride for all of us. The resultant nausea has exacerbated the whole issue, and even the savviest investors have let their fears and sentiment colour their investment decisions. The peaks and troughs were getting increasingly large throughout Q3 2002, as people bought and sold on fear and fancy.

Indeed, towards the end of last year, many private portfolio managers and their clients seemed to have lost patience in waiting for a stock market recovery. They turned away from equities and back towards money market funds, bonds, specialist non-market related funds (such as property and TEP funds) and structured products which carry a guarantee of some sort, to provide downside protection and some upside growth over time.

The negative aspect of these newly-popular structured products is that you’re effectively locked in by high redemption penalties for several years. And if the sharp recovery which some commentators and analysts are predicting comes to pass, you won’t be able to switch over into equity funds to take advantage of the upturn. Personally I prefer a more active and dynamic approach to portfolio management, even in a conservative growth portfolio.

As of late 2002, the Dow Jones Industrial Index had fallen for nearly three consecutive years - which in the past century it has done on very few occasions: first back in 1903, then in 1931, and again in 1941. In all three instances, the Dow continued lower in the subsequent year, but bottomed by the third quarter of that year, and rallied thereafter.

Studies of equity, bond and cash investments over time do show that while equities certainly are more volatile than lower-risk investments they have still outperformed over the longer term. For instance, it is somewhat sobering and in some ways heartening to realise that the annualised real return on US equities for the period 1900-2001 was 6.5%; for UK equities 5.6%. This compares with real annualised returns on US bonds of only 1.6% for the same period, and 1.3% for UK bonds.

Although it is not my function to make specific macro forecasts - especially when every financial commentator seems to take an opposing view - it is part of my function as a portfolio manager to try to identify trends objectively, and adjust my discretionary clients’ portfolios to a more aggressive or conservative stance accordingly.

For most clients my mandate is to create a flexible portfolio that for an income-orientated portfolio produces an acceptable rate of return within agreed risk parameters, or succeeds in protecting capital; or over the longer term, produces an attractive absolute return in terms of capital growth, despite short-term volatility.

Along these lines, even if I were to turn decidedly bullish towards equity markets at some point, I would never allow significant equity correlation to build up within a diversified portfolio: the portfolio would become unbalanced and tend towards speculation rather than being strategically structured to attain the client’s long-term financial objectives within agreed risk-aversion parameters.

Indeed, in all circumstances a portfolio manager must adopt prudent strategies that are likely to perform reasonably well under current and anticipated market conditions, but that taken as a whole will remain relatively unaffected by short-term market movements. I must therefore choose good funds from the bottom up while maintaining reasonable top-down common sense, and not lose my head or objectivity no matter what the markets do in the short term.

Portfolio management not only involves solid bottom-up due diligence on individual asset managers, but also involves at least an appreciation for the macro environment in which managers must operate. It also requires perspective and patience, and the willingness to make adroit changes as quickly as possible when indicated, with the objective of providing a robust allocation mix going forward, appropriate to each client’s individual needs and circumstances.

Snap Shot: Fungus and other such problems

by Harry Flashman

One of my lenses has been growing vegetables for me. A much loved 24 mm wide angle f2.8 Nikon began to get those tell-tale ‘spidery’ webs on the front element of the lens. I tried carefully polishing with a soft cloth, but to no avail. The fungus was on the inside of the lens not the exterior.

Like many photographers, you become adept at not seeing the gradual degradation of sharpness in your photographs, until one day it was no longer possible to ignore. Fortunately, my photographic friend Ernie Kuehnelt knew of a place in Bangkok that claimed it could clean lenses. He took the 24 mm there and it was ready the next day. Cost? 500 baht and that was all, and I have a sparkling clean lens again. It was even easier than they had thought initially, having quoted 800 baht as the estimate.

I am happy to reward good work, so here is the name of the shop. It is T.K. Camera Repair, 164/1 Sukhumvit Road, Soi 8, Bangkok, telephone 02 253 3827.

So how do you check for fungus? It is quite simple really. Take the lens off the camera (provided it is an SLR) and screw the aperture setting round to its maximum opening (this will be 2.8 or 1.4 generally). This allows you to scrutinize as much of the glass lens elements as possible. Look from both end towards a white background and see if you can spot the little trails or tendrils of the fungus. A little is acceptable around the edges, but it will continue to grow, so it will mean a trip to the camera doctor one day.

I have been asked in the past just how do you check a camera to make sure it works correctly. The simple answer is that you put film through it, but there are some items you should check first. Take a good look at the camera body, as well as the lenses as described above. Look for dents and scratches that would indicate that the camera has been dropped. Rule 1, don’t buy dropped cameras. They will always fail at the wrong time.

Now open up the back of the camera, where the film goes in. Look for wear and scratches. This can mean that the camera has had heavy use, and the previous owner (or you) has not been scrupulously clean in putting in the new film cassette. With the back open, fire off the camera and look at the shutters to see if they work smoothly and are not visually damaged.

Next item to check is the battery section. Open it up and peer inside after removing the battery. If there are signs of corrosion, this means that a battery has been left too long and has leaked. This is bad news, as the corrosion can get into the camera works and the electronics. Rule 2, don’t buy corroded cameras.

Now is the time to see just how well the camera does as far as taking pictures is concerned. Put it on Aperture Priority and take a series of shots, each one at the ascending aperture values. Now do the same with Shutter Priority, using the different shutter speed settings. Now take shots on Auto Mode of different scenes - some dark, some bright. Finally put the camera into Manual Mode and go through the different shutter speeds and aperture settings, adjusting for correct exposure each time.

Get the film developed and look at the results. You should have series of shots, all with the same density if the modes are working correctly. It is even best to check by looking at the negatives on a light box to check for consistent exposure density.

If the camera passes all the inspections and dynamic testing, then it is in good condition and with correct use and regular servicing should stand you in good stead for many years. Just look out for the fungus!

Modern Medicine: What’s the world coming to?

by Dr Iain Corness, Consultant

Well, the World Health Organization (WHO) has got a good idea where we’re headed, and much of that depends upon where we are and what will most likely strike us down. The WHO has, for the first time, released data to show the major influences and risks to health all over the world.

The global picture is interesting, with the number 1 health risk being underweight. Here is the influence of the African continent, with malnutrition and outright starvation influencing millions. Again, it is the African continent that has dominated the second major health risk - unsafe sex. The HIV/AIDS epidemic in that region influencing the global statistics. After those two comes high blood pressure and tobacco and then alcohol at number five.

However, if you split the statistics up and examine the situation in developing countries (such as much of Asia) the picture is different. Number 1 health risk is alcohol, followed by high BP, tobacco and being underweight.

A close look at the risks for the developed societies (that covers the Europeans, Brits, Americans, Australians) gives yet another differing list of “most likelies”. Top spot is tobacco, followed by high BP, alcohol, cholesterol and being overweight.

The things that are waiting to get you are quite different. As the WHO report states, “As a country develops and more people buy processed food rather than growing and buying raw ingredients, an increasing proportion of calories tends to be drawn from sugars added to manufactured food and from relatively cheap oils. Alongside the change in diet, changes in food production and the technology of work and leisure lead to decreases in physical exercise. The consequent epidemic of diet-related non-communicable diseases (obesity, diabetes, hypertension and cardiovascular disease) is projected to increase rapidly. For example, in India and China, a shift in diet towards higher fat and lower carbohydrate is resulting in rapid increases in overweight - among all adults in China and mainly among urban residents and high income rural residents in India.”

An interesting fact comes out of some developing nations, however, where countries have taken it upon themselves to promote a healthier way of life, despite the advent of the high living “western” style economy. Again, quoting WHO, “The Republic of Korea is an example of a country that has experienced rapid economic growth and the introduction of Western culture since the 1970s. There were large increases in the consumption of animal food products, and a fall in total cereal intake. Despite this, national efforts to retain elements of the traditional diet - very high in carbohydrates and vegetables - seem to have maintained low fat consumption and a low prevalence of obesity.

“The Republic of Korea has strong mass media campaigns, such as television programmes, promote local foods, emphasizing their higher quality and the need to support local farmers. A unique training programme is offered by the Rural Development Administration. Since the 1980s, the Rural Living Science Institute has trained thousands of extension workers to provide monthly demonstrations of cooking methods for traditional Korean foods such as rice, kimchi (pickled and fermented Chinese cabbage) and fermented soybean food. These sessions are open to the general public in most districts in the country, and the programme appears to reach a large audience.”

It’s not too late to look at your diet either! And put that cigarette out.

Heart to Heart with Hillary

Dear Hillary,

I have lived here now on and off for 2 years. I have had many pleasant experiences both during the day and at night. However I feel I must ask your advice on one that happened to me just the other day. I was at my friends bar imbibing in a libation, one which “refreshes the parts other beers cannot reach”, when I decided to show the lovely ladies my party trick. This involved picking up the bottle between the cheeks of my bottom. Having achieved this goal to much amusement and applause I bowed and slipped over, sitting down forcibly on my nether regions. This caused much pain, bruising to my tailbone and when the bottle broke, lacerations to that area. Now my question to you Hillary is, do I look to sue Heineken as I am definitely NOT refreshed or should I start drinking beer from cans only? Choccies and champers in the post as we speak, for your kind help.

Sore and still standing Kenny

Dear Sore and still standing Kenny,

You are a silly lad, aren’t you, Petal. And as for your party trick, remind me never to come to any of your parties, despite any offers of chocolates and champagne. Hillary is not a lawyer, but I would not waste money trying to sue, I think it is better that you stick to “Heinecans”!

Dear Hillary,

I am unhappy with my medical insurance policy. I have been told that they will not insure me after I get to 70 years of age, even though I have been with them for the past three years. Do you think this is fair? I am now 60 and I have to start thinking about whatever the future has in store for me. Surely an insurance company is supposed to balance out high risk people with low risk clients? Is there an insurance council here that I can go to? Or what else should I do?

Disgusted

Dear Disgusted,

This is a lonely hearts column, my Petal, but I’ll tell you what I have found out - you never want to pay for insurance, until you need it, and by then it may be too late. Don’t let this happen to you. Why give them ten years more premiums if they are going to kick you overboard? Vote with your feet and shop around with a reputable insurance agent and find a company that will continue to insure you after 70. They do exist! Both reputable insurance agents and good insurance companies.

Dear Hillary,

I am thinking of buying a motorbike to ride around the city, even though it is many years since I last ‘threw my leg over’. I have a lot of worries about this as I have heard that a lot of bikes are stolen and end up crossing the border. What is your feeling about this?

Ago

Dear Ago,

Feelings about what, Ago? Whether you are still good enough to throw the leg over, or whether your motorcycle will take its destiny into its own handlebars and rush across the border? Really, motorcycle riding is something that Ms. Hillary does not do as I consider it far too dangerous. The majority of road accidents are with motorcycles, and that’s enough for me. I have no desire to become a statistic. Certainly I have heard that there is a brisk traffic in border-hopping bikes, so all you can do is to make sure that you chain the motorcycle up to something solid - or a mountain lion every time it is left unattended! (There’s a great photograph of a lion and a Harley Davidson in a pub in Bangkok, but I can’t remember which one! It must be the Alzheimer’s setting in!) I also know of a situation where a driver chained the front wheel of his sports car to a lamp post. He returned to find the front wheel still safely chained to the post, but the car was gone. All the felons had done was to jack the car up and change the wheel.

Dear Hillary,

How’s the choccies and champagne, darling? Are you getting a reasonable ration? My friends all worry about you and your diet. Some have gone as far to suggest you must be in training for the Miss Jumbo competitions, or perhaps you have sugar? Anyway, the lads were discussing you over a beer at our local and I just wanted to tell you to keep going as we enjoy your weekly advice, but look after the diet, it sounds a bit sus (sic).

Me and the lads

Dear Me and the lads,

Well aren’t you lovely boys! But if you really wanted to make Hillary’s day, you could have included a box of chocolates with the letter, which could have been attached to a bottle of bubbly. Thank you too for enquiring after my health, and my doctor says I haven’t got any traces of sugar, but my dentist tells me that I should cut down on the hard centres as they are pulling my fillings out. As far as the Miss Jumbo title is concerned, I’ll have you know that Ms. Hillary is a slim size 14. What about the lads, with all that beer? You take care, too!

A Slice of Thai History: The pre-eminence of Ayutthaya

Part One 1488-1516

by Duncan Stearn

As far as external trade was concerned it was the Chinese, with their large and versatile junks, who were initially the most prominent and important trading partners with the kingdom of Ayutthaya.

The monarchs of Ayutthaya found it expedient to enter into a tributary relationship with the Chinese emperors. This was basically not much more than lip service but it served the purpose of maintaining steady and profitable trade with China from the Ming through to the Manchu dynasties.

Trade in clothing with Muslim merchants from India and the Arabian Peninsula was also a cornerstone of wealth for the Thai state. Indeed, the importance of the Chinese and the Muslims was so great that the Ayutthayan monarchy divided its foreign trade department into two sections, one for the Chinese and one for the Muslims.

Chinese, Indians, and later Persians and Japanese merchants and their families began settling in Ayutthaya. They were welcomed by the monarchy and a number became high ranking court officials.

When King Boromoraja III died in 1491, Ramathibodi II, a son of Boromo Trailokanat, succeeded him. As the eleventh monarch of Ayutthaya he was to reign for a period of 38 years, the second longest of what were to be 34 rulers of the pre-eminent state in Thailand. Only his father, who ruled for 40 years, was on the throne longer. Indeed, in the pantheon of Thai monarchs just the current king, Bhumibol Adulyadej (Rama IX) and Chulalongkorn (Rama V) have occupied the supreme position for longer periods.

Ramathibodi II, unbeknownst to him, was at the helm when European nations such as Portugal, Spain and the Netherlands began their extended maritime explorations of the world. In 1492 Christopher Columbus travelled as far as America while in 1498 Vasco da Gama sailed around the Cape of Good Hope and reached India.

The profits to be made from the spice trade, as well dealing in silks and porcelain, lured European adventurers to Asia. Portugal established a base at Goa and in 1511 the Portuguese viceroy Alfonso d’Albuquerque launched an assault against Malacca.

The viceroy learned that the King of Ayutthaya had claims on Malacca and duly despatched an envoy named Duarte Fernandez to see King Ramathibodi II. The envoy basically presented the Thai monarch with a fait accompli. A second envoy, Miranda de Azevedo, was sent to Ayutthaya and in return Ramathibodi despatched a Thai mission to Goa.

In 1516, the Portuguese governor of Malacca appointed Duarte de Coelho as the third envoy to Ayutthaya. He concluded a treaty with Ramathibodi, the first between a European nation and Thailand. The Portuguese agreed to supply Ayutthaya with firearms and in exchange they were allowed to establish a trading station (factory) in Ayutthaya. The Portuguese were also given permission to practice their religion.

Unfortunately, the Portuguese not only brought weapons they also brought priests who attempted to convert the Thais to Christianity. The Thais, like the Cambodians after them, failed to respond with much enthusiasm to the new faith and the clergy eventually had to admit defeat. However, whilst the Portuguese failed on the spiritual front, they did have a profound effect on the local cuisine, being credited with introducing the humble chilli to the good burghers of Thailand.

Bits ‘n’ Bobs

Personal Directions: Everything needs a plan

by Christina Dodd, founder and managing director 
of Incorp Training Asssociates

Hi there! Now that we are in the year 2003 - what is on the agenda? Have you given it any thought? If not then it’s time - now - to look at what’s in store for the year and to get moving on it straight away! Of course, the better thing to have done would have been to think about this year - last year - and to have had some plans in place.

Nothing will happen - well nothing that bears fruit - if we don’t set some clear goals and targets and then draw up plans, put them in writing, log down the details and get cracking on them. Planning is crucial to the success of any business venture or any dream-home you fantasize about, or anything of meaning that you want to have or do in your life.

It’s so easy to fall into the trap of waiting for things to happen or waiting for others to make things happen. It’s great to be able to set goals and to know what you want. But unless you get out there and start applying yourself to achieving those goals, you’ll end up with a big fat zero for results!

So take a large notebook with enormous amounts of paper or a huge whiteboard or sit down at the PC and begin to write some plans about your goals or the things you want to achieve this year. Don’t skimp on your tools and feel free to put down as many details and ideas as you can. Writing things down can be a great motivator in itself because you begin to see things more clearly as your thoughts take form and shape.

And don’t take the attitude that you have no time and that you’re too busy, or that you can remember everything and that there’s no real need for writing things down, or that you’ll do it later. If you do, then you’re courting failure!

What’s so difficult about making a plan and putting some definition to it? Perhaps you should ask yourself if your goal really is important. If you answer yes, then ask yourself another question: why aren’t you doing anything about it?

Time slips away so quickly; it disappears as fast as running water from a tap. Suddenly it’s gone and we are left wanting it back so we can attend to the things that we said we would do. Take some time to sit and think out your plans. If you do this right in the beginning - right from the start - then you’ve taken a step in the right direction.

Planning is essential for even the simplest of tasks. Take the weekly shopping for example. How many times have you spent hours doing the grocery shopping only to come back home and find that you forgot several items of importance and then you become annoyed because you have to go back to get them. I find that I have to write a thorough list of everything I need in order to avoid this. It works for me and many people do it. You might spend a bit of time going through the kitchen cupboards and the laundry shelves, but in the end you complete your task successfully.

Imagine running a restaurant without planning each day meticulously! Even the finest establishments with the most experienced of managers and chefs plan every detail down to the last sprig of rosemary. Imagine the automobile industry or aviation industry without plans! Indeed no industry could flourish without planning. What about your own particular job or position? If you are in marketing or sales, how do you function and perform your duties? You don’t just arrive at the office every morning and begin to wonder what it is that you will do for the day do you? It all comes down to planning.

In all walks of life, in all areas of industry plans are necessary to ensure results.

It’s also interesting to observe the way in which people actually prepare their plans. Some minds work very differently to others and we all have our own unique styles or ways of doing things. Some people can work in what seems to be chaos - but if it’s organized chaos - then that’s a plus! One thing that I have noticed whenever the subject of planning comes up, is that most people say that if they have everything written in a book, as opposed to lots of pieces of paper, then the possibility of getting results is far more likely. I couldn’t agree more and it is a fact that containment of information is a contributing factor towards completion of a task.

It’s fairly easy to understand why, but you would be surprised at just how many people don’t work or plan this way, despite how simple it is! They insist on using numerous pieces of paper with information scrawled on the back and so forth. If you work alone and perhaps live in a cave up in the mountains somewhere, then maybe this is what works for you. But if you are like most of us and work with other people, then having some order to your planning is absolutely essential.

One executive I spoke to recently finally kicked the habit of planning like this after many years. Whist he was still able to get his job done this way, he always knew that if he could operate in a more organized fashion that he would finish projects more quickly and just be generally more effective. His “pieces of paper” mentality held him back somewhat from the higher level of achievement that he is now able to provide. Since realizing the value of planning methods and preparation, he has instilled it even more so in the minds of his staff.

In training, planning is also paramount to the success of any program. Every program needs a plan. There has to be a plan for execution and delivery. The contents have to be defined and well set out. The techniques to be used require planning. The seating has to be planned. There’s no escaping any of this - that’s what success is all about!

Have a great week!

Should you wish to contact me to assist in your training needs please email me at [email protected]

Social Commentary by Khai Khem

Racetracks, casinos and an international airport for Chonburi

It is true most kinds of gambling are still illegal in Thailand, but perhaps the time has come to revue the idea of establishing a few well positioned casinos inside the Kingdom for economic purposes. The fact that billions of baht are flowing out of the country to casinos in other countries is something to consider very seriously.

Chonburi Province is determined to find a way to get the money and economy it needs to develop and modernize. Direct investment for industrialization, the property sector and tourism have all contributed to our region’s growth and modernization up to a point. However, further development of our infrastructure and effective administration will take a lot more money.

If it really is time to dispense with the moralistic aversion toward gambling and take on a more realistic view of the possibilities of building casinos here and operating them under strict laws and vigilant administration, we must acknowledge that planning procedures are critical. And once the plans have been made, precise execution of them must go forth. Like how will we control our infamous corruption? Thailand is still regarded as a very corrupt country by outsiders.

In many ways, there is no excuse for Thailand’s backwardness. The knowledge, experience, technologies, and models have been out there for us to follow for generations. It’s not like we had to come up with all of these ideas and research ourselves. All we had to do is look at the successful examples of how to run a nation, our cities and our rural areas properly, and then go about it.

In Thailand, forward planning is a cultural skill not yet acquired. Instead of getting personal, let’s look at our major urban areas, which are examples of neglect and chaotic administration. The left hand doesn’t know what the right hand is doing. Various government departments, from the top down, don’t work together. They don’t even talk to each other, so coordinated efforts are impossible. Our farming sector has also been a victim of poorly thought-out policies and hair-brained ideas that don’t work.

Now let’s get on to Pattaya. We want casinos here and a Turf Club and the reason we think we deserve it is because we have thousands of hotel rooms and hundreds of restaurants, beaches and a party atmosphere.

What we DON’T have is enough roads, streets and highway over-passes to move hundreds of thousands of people. We DO NOT have an international airport. Phuket has one. Chiang Mai has one. But who cares? “Build and they will come” (and we’ll figure out the rest later). Typical.

For readers who are newcomers to Thailand or don’t live here at all, like the casino row, the argument for turning U-Tapao into an international airport has been debated for many years. There are reasons why we may never get U-Tapao developed. The region’s leaders will have to come up with some solutions or compromise.

Pattaya doesn’t even have a city bus system or a proper taxi service. Two weeks before the Scout Jamboree, baht bus drivers were called in for B.F Skinner behavioral training so they didn’t shock our respectable visitors. This by the way is temporary. Apparently good behavior and fairly fixed prices by baht bus drivers expires when the Scouts go home. Why? If they can pull it off for 2 weeks, why not make it permanent? Why throttle a perfectly good idea before it has a chance to breathe?

The issue of gambling casinos was up for debate in the 1990s and speculation on the possibility of changing the law sparked a building frenzy of flashy new buildings in Pattaya and Jomtien which could either house casinos, or in some way be a part of the “food-chain”. We have now come full circle again - around and around - like hamsters on a wheel in a cage.

A new Royal Turf Club would be nice. But we have to plan for it. Bangkok doesn’t want it because of the chaos and traffic congestion 30,000 spectators can create on race days. Okay, the Turf Club will be outside the city. But don’t Pattaya businesses expect these people to use our hotels, restaurants and entertainment venues? And won’t the people who come to our casinos also avail themselves of Pattaya’s other delights?

If we want to double and triple our population during certain days, times of year, and special events, it would be a good idea to get the infrastructure in place to handle this effectively.

Our phone lines go out every time it rains. The traffic-load on our local Internet servers cannot handle sophisticated demands. Power failures and surges are common, which not only leave people without electricity for hours, but a power surge can destroy expensive computer, home, office and factory equipment.

There are whole areas outside Pattaya which do not even have city water and must use artesian wells, or hire trucks to fill personal water storage tanks. If you are fortunate to live or own a business on the beachfront from North Pattaya to Walking Street, the area is clean, attractive and most facilities work fine. Get off the beaten track and civilization disappears. Cheap, quick, and shabby won’t cut the mustard anymore.

Let’s face it. Pattaya is doing a juggling act right now. Maybe we’ve bitten off more than it can chew. Perhaps we should swallow one mouthful before we cram another into our mouth. People who think reasonably know you can choke like that.

There are many officials and prominent business people in the community who acknowledge Pattaya has been poorly planned and administrated and is not keeping up with rapid growth. They know how vital the development of U-Tapao airport is and that the stone-walling of the project is inexcusable. They are fully aware that without up-graded infrastructure our more grandiose plans for the region will either never go forward or be dragged into chaos and false starts.

Knowing this and doing something about it are two different things. Often smart people with viable plans are blocked and out-numbered by the short-sighted majority or by people in power who bar the gates to progress. But times are changing and we’d better get on the bandwagon. Keep up or get left behind.